Question

when studying proposals to launch a high-end fashion boutique? Summarize what specifically do you think the angel investor is interested in understanding when concentrating on this section? Sana is thinking about opening a high-end fashion boutique in an affluent suburb of Karachi. She contacts an angel investor she know has previously invested in this type of firm and asked if he would read her business plan. She received the following response from the angel investor: “I would be glad to read your plan. But you should know that when examining business plan of high-end fashion boutique, the section I concentrate on with great intensity is called “The Economics of the Business.” Why do you think the angel investor concentrates on this particular section of a business plan?'

Answer 1

An angel investor is a person with a high net worth who is ready and willing and has, in the past, invested in start-up projects and small businesses in return for ownership rights of the company. This means he is also eligible to a share of the profits of the proceeds of the business.

An angel investor willl be interested in all those aspects of the business which will impact the profitability of the business. Hence, economics of the business will be his prefered section to see if the business venture is worthy of his investment or not.

The economics of the business will contain valuable information about the business - its management, the factors affecting the market for its products, the amount of labour and capital required and the costs involved in the production processes, the longevity of the business, the present scope of the business, the future scope and possibility of expansion of the business, etc. All this will provide useful information required by the angel investor to make sure that his investment gets the desired returns from this venture. If the investor does not see potential for the business and does not see strength in the business plan, then he will not give his money. Hence, the business plan must outline clearly the points of strength in the business venture, and also the points of weakness and how they will mitigate those.